Autodesk 2014 Annual Report Download - page 126

2013 Annual Report
2014 Form 10-K 52
Our non-GAAP financial measures may exclude the following:
Stock-based compensation expenses. We exclude stock-based compensation expenses from non-GAAP measures primarily
because they are non-cash expenses and management finds it useful to exclude certain non-cash charges to assess the appropriate
level of various operating expenses to assist in budgeting, planning and forecasting future periods. Moreover, because of varying
available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB
ASC Topic 718, we believe excluding stock-based compensation expenses allows investors to make meaningful comparisons
between our recurring core business operating results and those of other companies.
Amortization of purchased intangibles. We incur amortization of acquisition-related purchased intangible assets in connection
with acquisitions of certain businesses and technologies. Amortization of intangible assets is inconsistent in amount and frequency
and is significantly affected by the timing and size of our acquisitions. Management finds it useful to exclude these variable
charges to assess the appropriate level of various operating expenses to assist in budgeting, planning and forecasting future periods.
Investors should note that the use of intangible assets contributed to our revenues earned during the periods presented and will
contribute to our future period revenues as well. Amortization of purchased intangible assets will recur in future periods.
Goodwill impairment. This is a non-cash charge to write-down goodwill to fair value when there was an indication that the
asset was impaired. As explained above, management finds it useful to exclude certain non-cash charges to assess the appropriate
level of various operating expenses to assist in budgeting, planning and forecasting future periods.
Restructuring charges (benefits), net. These expenses are associated with realigning our business strategies based on current
economic conditions. In connection with these restructuring actions, we recognize costs related to termination benefits for former
employees whose positions were eliminated, and the closure of facilities and cancellation of certain contracts. We exclude these
charges because these expenses are not reflective of ongoing business and operating results. We believe it is useful for investors
to understand the effects of these items on our total operating expenses.
Loss (gain) on strategic investments. We exclude gains and losses related to our strategic investments from our non-GAAP
measures primarily because management finds it useful to exclude these variable gains and losses on these investments in assessing
our financial results. Included in these amounts are non-cash unrealized gains and losses on the derivative components and realized
gains and losses on the sale or losses on the impairment of these investments. We believe excluding these items is useful to
investors because these excluded items do not correlate to the underlying performance of our business and these losses or gains
were incurred in connection with strategic investments which do not occur regularly.
Establishment of a valuation allowance on certain net deferred tax assets. This is a non-cash charge to record a valuation
allowance on certain deferred tax assets. As explained above, management finds it useful to exclude certain non-cash charges to
assess the appropriate level of various cash expenses to assist in budgeting, planning and forecasting future periods.
Discrete tax items. We exclude the GAAP tax provision, including discrete items, from the non-GAAP measure of income,
and include a non-GAAP tax provision based upon the projected annual non-GAAP effective tax rate. Discrete tax items include
income tax expenses or benefits that do not relate to ordinary income from continuing operations in the current fiscal year, unusual
or infrequently occurring items, or the tax impact of certain stock-based compensation. Examples of discrete tax items include,
but are not limited to, certain changes in judgment and changes in estimates of tax matters related to prior fiscal years, certain
costs related to business combinations, certain changes in the realizability of deferred tax assets or changes in tax law. Management
believes this approach assists investors in understanding the tax provision and the effective tax rate related to ongoing operations.
We believe the exclusion of these discrete tax items provides investors with useful supplemental information about the Company's
operational performance.
Income tax effects on the difference between GAAP and non-GAAP costs and expenses. The income tax effects that are
excluded from the non-GAAP measures relate to the tax impact on the difference between GAAP and non-GAAP expenses,
primarily due to stock-based compensation, amortization of purchased intangibles and restructuring charges (benefits) for GAAP
and non-GAAP measures.
Liquidity and Capital Resources
Our primary source of cash is from the sale of licenses to our products. Our primary use of cash is payment of our
operating costs which consist primarily of employee-related expenses, such as compensation and benefits, as well as general
operating expenses for marketing, facilities and overhead costs. In addition to operating expenses, we also use cash to fund our